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Vaughn Palmer: Devil’s in the details on spirited shakeup of liquor policy

Given new rules on transfers, market value of a liquor licence just went up

The B.C. Liberals waded in Thursday with major changes in the way beer, wine and spirits are to be marketed, priced and sold in B.C.

Photograph by: Justin Sullivan
, Getty Images

VICTORIA — After tiptoeing around the edges of liquor policy-making for many months, the B.C. Liberals waded in Thursday with major changes in the way beer, wine and spirits are to be marketed, priced and sold in B.C.

The announcement from Attorney General Suzanne Anton provided the first substantive details on how the Liberals intend to permit the establishment of stand-alone liquor outlets inside selected grocery stores.

Based on what reporters were told at a briefing and press conference at the legislature, the Liberals intend to create a lucrative trade between existing holders of liquor licences and would-be operators of outlets inside grocery stores.

The government will cap the number of licences at the current level and at the same time waive a rule that prevents licences from being moved further than five kilometres from their existing location.

So a money-losing operator in Kamloops would now be able to sell his licence to a booming grocery store in Abbotsford? Yes, reporters were told.

The only remaining limitation on transfers would be a rule against locating a new liquor outlet within one kilometre of an existing one.

“There’s no doubt that the ability to move the licence will create additional attractiveness of licences, “ agreed Anton, “and that’s why we are going to be considering fees or levies on those licences.” To be imposed, presumably, on the value at the time of the transfer.

How much are licences worth today, even with the current limitations on transfers? “You would be better asking that question of people in the marketplace,” replied Anton. Thousands of dollars? “Oh, much more than that.”

Shane Simpson, her Opposition critic on the liquor file, estimated Thursday that with the lifting of the major restriction on transfers, licences could be worth as much as $1 million.

The actual market price will depend on the number of marginal operations in some parts of the province and the prospects for expansion elsewhere. But much guesswork remains on this file. Although Anton tabled some enabling legislation Thursday, most of the details were left to regulations that will be drafted later.

Which grocery stores will qualify liquor outlets and on what basis? Floor space? Sales volume? Size of community? “Details of grocery store eligibility continue to be developed and will be announced at a future date,” said the press release.

The Liberals added a further sweetener for grocery stores with the news that selected outlets will be green-lighted to sell premium B.C. wines in the aisles, absent the store-within-a-store model for sale of other alcoholic beverages.

The number of such VQA (“vintners quality alliance”) outlets will be limited to minimize potential challenges from wine producers in other jurisdictions under Canada’s free trade agreements. Down the road, the government will consider a similar arrangement for premium B.C. beer.

The limited number of opportunities ought to ensure a bit of a scramble for the special licences. How will stores qualify? ”Eligibility criteria is under development.”

The government is also moving to transform wholesale pricing at the liquor distribution branch. From the current system of five different discount rates on 22 ranges of products, the Liberals will establish one set price for all liquor retailers, public and private.

“The goal is to put them on the same footing,” explained Anton. “If you buy a bottle of wine at $15 wholesale price, it’s $15 whether you’re a private retailer or whether you’re a government retailer.”

The move to single pricing could be a recipe for disruptions among retailers who’ve been paying such a wide variety of prices — and Anton herself suggested as much during debate in the legislature last summer.

“The question of one wholesale price did get assessed (earlier) and the assessment concluded that there would be significant impacts. There would be winners and losers. It would have been extremely disruptive to the industry and very complicated, so the decision was made not to go there. The question of ‘Should we try again at this point?’ is not under consideration at this point.”

What changed? Quite a lot, says her ministry, because the single-pricing model considered earlier is different from the one now being prepared.

Then again, the wholesale pricing model is also a work in progress — “more details will be provided in the coming months” — so it remains to be seen to what extent it will alter the playing field in the retail sector.

Public stores have a measure of protection thanks to the B.C. Government and Service Employees Union, which secured a contractual guarantee that the Liberals will maintain at least 185 of them, 195 being the current number.

Anton didn’t dispute that the new pricing model could put pressure on the public as well as the private stores. “Each store will need to create a profit,” she told reporters. “The private retailer needs to create a profit for its owners and the government store will be expected to create a profit for government.”

Sounds like winners and losers to me. But with so many aspects of this policy yet to be determined, there’s still plenty of room for manoeuvring inside and outside government.

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